US: Tax Reform Rewards Firms Which Shifts Profits
The corporate tax cut recently passed by Trump and fellow Republicans which was in part designed to discourage U.S. businesses from moving profits overseas could instead make the practice much more rewarding.
This is due to the fact that companies which shifted profits linked to U.S. sales, production or research previously had to pay U.S. taxes on the money at the rate of 35% when they brought those profits home.
For example, AbbVie Inc’s Chief Executive Richard Gonzalez apparently told investors earlier that the American drugmaker expects its tax rate to fall to 9% this year from around 22% in recent years.
The surburban Chicago company however has never reported a profit in its home country despite recording over half of its USD $28.2 billion in 2017 sales in the U.S and basing most of its research facilities there.
AbbVie reported foreign earnings before income tax of USD $10.4 billion on international revenue of only USD $9.97 billion.